India’s Foreign Ministry ordered the U.S. Embassy in a notice sent late Monday to shut down all “commercial activities” at the popular club it operates, which includes this swimming pool. (TWP)

First, the Indian government yanked security barricades from outside the U.S. Embassy. Then, it barred American diplomats from importing booze. And now, it is seeking to virtually shut down the local American club — a beloved oasis of hamburgers, bowling, swimming and iced lattes in the middle of this dusty capital.

The measures are signs of what is becoming one of the most bitter diplomatic disputes in years between the world’s most populous democracies.

To many Americans, the row might seem to be over a routine matter: the arrest of an Indian diplomat in New York on allegations of visa fraud involving her Indian maid. But to Indians, the issue is one of national pride — and their government is putting an extraordinary squeeze on American diplomats to make its point.

In its latest action, India’s Foreign Ministry ordered the U.S. Embassy in a notice sent late Monday to shut down all “commercial activities” at the popular club it operates, saying non-diplomats were being allowed to enjoy its privileges, including a bar, restaurant, hair salon and recreational facilities.

“If they are going to throw their rule book at us, then we are saying we, too, have a rule book in India,” said K.C. Singh, a former diplomat and foreign-policy commentator.

Read the complaint


The complaint against Devyani Khobragade, deputy consul at India's consulate in New York, describes the charges, which include visa fraud. Read it.

Read Khobrogade's note to colleagues

Read the U.S. attorney's statement on the case

Devyani Khobragade gives an interview to Eye on South Asia in which she talks about her career and Indian diplomacy.

But analysts say the damage could be much greater than American expats’ loss of their cocktails and swimming pool.

“Of late, there has been a growing feeling here that the U.S. has lost interest in India, that it is no longer the special friendship that was forged during the Bush era,” Singh added, referring to the presidency of George W. Bush. “The relationship is still fragile and is resting on a crag. Till we put it on flat ground, episodes like this can cause major damage to the ties.”

Ashley Tellis of the Carnegie Endowment for International Peace in Washington said, “The Indians have taken an extremely tough line on this. They are bracing for a full-fledged fight” if the case against the diplomat goes forward.

One high-level visit to India, scheduled by U.S. Energy Secretary Ernest Moniz for next week, has been canceled, American officials said.

The Indian government’s actions were triggered by the arrest on Dec. 12 of its deputy consul general in New York, Devyani Khobragade, on charges of visa fraud in connection with the alleged underpayment of her Indian nanny. Khobragade’s attorney has denied the charges.

The news that Khobragade, 39, was strip-searched and briefly incarcerated prompted outrage in India, and its government called the incident an insulting violation of diplomatic immunity. It has demanded that all charges be dropped.

The U.S. government has said that Khobragade had immunity only in connection with her consular duties. The U.S. attorney for the Southern District of New York, Preet Bharara, has said that the case is simply about upholding the rule of law.

On Monday, Khobragade agreed to waive a Jan. 13 indictment deadline, which gives federal prosecutors and State Department officials more time to discuss a possible resolution of the case with defense lawyers. But Bharara said he saw no reason for the waiver and asked the court to hold the scheduled hearing. The federal judge refused to extend the deadline Wednesday.

Throughout the controversy, the State Department has sought to keep its diplomatic dealings with India on a separate plane from what it has described as an unfortunate law enforcement matter in which it is powerless to intervene. India sees no such separation, however.

Singh said the dispute feeds into “post-colonial paranoia” in India, a former British colony, in which the public bristles at anything perceived as unfair treatment by a foreign country.

To show its displeasure, the Indian government has taken measures ranging from serious to seemingly small. It removed security barricades at the U.S. Embassy. Last week, it asked the embassy not to screen movies at the American Center without obtaining domestic licenses. Indian officials have alleged that some spouses of diplomats teach at the embassy school illegally, and the embassy has been asked to provide details about teachers and their salaries.

The Indian government has also told the New Delhi police to waive immunity for traffic violations involving embassy vehicles — a common diplomatic courtesy.

The club run by the American Community Support Association is a special target, a source of comfort and convenience for U.S. government employees and American businesspeople, journalists and others who are sponsored by diplomats and pay for membership.

It is an oasis of Americana, featuring a sparkling-blue swimming pool and waiters who bring hamburgers and Cokes poolside. At its outdoor cafe, members sip iced mochas while watching kids from the American Embassy School play baseball on the diamond next door.

A Foreign Ministry official, speaking on the condition of anonymity because of the sensitive nature of the subject, said that the facilities were meant for diplomats and that if they were opened to others, “then it becomes a commercial venture and they should have paid taxes in India.”

The ministry notice asked the embassy to discontinue the club’s “commercial activities” and to submit its tax returns by Jan. 16.

Asked about the Indian actions, the State Department on Wednesday repeated an earlier response.

“We, of course, endeavor to always be in compliance with local laws and regulations,” spokeswoman Jen Psaki said. India’s diplomatic notes regarding U.S. violations “raise highly technical and complicated issues,” she said. “We’re continuing our conversations with the government in response to diplomatic communications and asks, with the importance of our broad relationship in mind.”

She added, “We continue to believe that we can maintain our strong historic relationship.”

The State Department’s Office of Inspector General had pointed out in a 2005 report that the use of the commissary at the club by people other than U.S. diplomats must stop.

One American woman who used the club said it would be sorely missed if it were shut down or its activities limited.

“The biggest attraction is the swimming pool. What will we do in the summer?” she said, speaking on the condition of anonymity because of the diplomatic controversy. She said she also bought brands at the club that were difficult to find in India, for products such as whole-wheat flour and wine.